Aave Approves $50M Annual AAVE Buyback: Potential Long-Term Price Boost Amid Pressures

• Aave DAO approves $50 million yearly buyback to boost AAVE tokenomics.

• Pilot program repurchased 94,000+ AAVE tokens, spending over $22 million.

• AAVE price reached $385 in August 2025 but fell below $200 due to Q4 market pressures; strong Ethereum correlation influences swings.

Discover Aave’s AAVE token buyback program details, pilot results, and market impacts in this 2025 update. Learn how deflationary measures could drive long-term value—explore DeFi strategies today.

What is Aave’s AAVE token buyback program?

Aave’s AAVE token buyback program is a DAO-approved initiative to allocate $50 million annually for repurchasing AAVE tokens, aimed at improving token value accrual through deflationary mechanics. Launched after a successful pilot in May 2025, the program involves weekly purchases ranging from $250,000 to $1.75 million, depending on protocol revenue and market conditions. This structured approach seeks to reduce circulating supply and support long-term token utility in the DeFi ecosystem.

Source: Aave DAO

The proposal requires two additional governance steps before full implementation, but initial evaluations indicate positive potential for AAVE’s economic model. By committing protocol fees to these buybacks, Aave reinforces its position as a leading DeFi lending protocol.

What were the results of Aave’s buyback pilot program?

The pilot program, initiated in May 2025, proved effective in enhancing AAVE’s tokenomics by repurchasing over 94,000 AAVE tokens at a cost exceeding $22 million. In May alone, the initiative added 20,100 AAVE tokens to reserves—the highest monthly volume during the trial—coinciding with a 50% price surge that propelled AAVE to new highs amid broader market recovery.

Source: Blockworks

From July through October 2025, monthly acquisitions averaged around 10,000 AAVE tokens, contributing to a peak price of $385 in August. However, subsequent Q4 market headwinds pulled AAVE below $200, despite continued buybacks. Data from protocol analytics shows these purchases directly supported price stability during volatile periods, with experts noting the program’s role in aligning incentives for long-term holders. According to DeFi analysts, such mechanisms can reduce supply by up to 5-10% annually under favorable revenue conditions, fostering sustainable growth.

How does Ethereum correlation affect AAVE’s performance?

Aave’s AAVE token exhibits a strong positive correlation with Ethereum (ETH), amplifying its price movements within the DeFi sector. During ETH rallies, AAVE often experiences heightened gains due to increased protocol activity on Ethereum-based networks, while downturns lead to sharper declines. This relationship underscores AAVE’s sensitivity to Ethereum’s role as the DeFi backbone.

Source: Blockworks

Historical charts illustrate that AAVE outperforms ETH during bull phases, with gains up to 1.5 times ETH’s in Q2 2025. Conversely, the October flash crash exacerbated AAVE’s drop, highlighting risks tied to this linkage. As Ethereum’s momentum influences DeFi liquidity and adoption, a potential ETH rebound could similarly elevate AAVE, especially with the buyback program reducing supply pressure.

What role do exchange inflows play in AAVE’s price dynamics?

Exchange inflows have exerted downward pressure on AAVE’s price, with CryptoQuant data revealing a surge to a seven-month high in netflows last month—approximately 10,000 AAVE tokens moved to exchanges weekly for potential sell-offs. This activity aligns with broader market selling since the October 2025 crash, keeping AAVE subdued below $200.

Source: CryptoQuant

Unless this selling pressure eases, short-term price recovery may remain challenging. However, the formalized buyback program could counterbalance these inflows by absorbing supply, as evidenced by the pilot’s success in stabilizing reserves. On-chain metrics from sources like CryptoQuant indicate that sustained protocol revenue—over $100 million in fees in 2025—provides a robust foundation for ongoing repurchases.

Frequently Asked Questions

Why did the Aave DAO approve the $50 million annual AAVE token buyback program?

The Aave DAO approved the program due to the pilot’s strong success in value accrual, repurchasing 94,000+ tokens for $22 million since May 2025. This deflationary step uses protocol revenue to reduce supply, enhancing long-term token utility and holder incentives in the DeFi lending space.

Can the Aave buyback program help AAVE price surpass $200 again?

Yes, the Aave buyback program could support AAVE reaching above $200, particularly if broader market sentiment improves and Ethereum rallies. The pilot demonstrated price boosts during recoveries, and ongoing repurchases may offset selling pressures for sustained upward momentum in DeFi.

Key Takeaways

• Aave’s buyback success: The May 2025 pilot acquired over 94,000 AAVE tokens, proving effective for tokenomics improvement.
• Market influences: AAVE’s price correlates strongly with Ethereum, showing amplified gains and losses tied to ETH trends.
• Future outlook: Formalizing $50 million annual buybacks could counter exchange selling and drive long-term value growth.

Conclusion

In summary, Aave’s AAVE token buyback program marks a pivotal step in refining DeFi tokenomics, following a pilot that repurchased significant supply and navigated market volatility. With Ethereum correlation and exchange dynamics at play, this initiative positions AAVE for resilience. As DeFi evolves in 2025, stakeholders should monitor revenue trends for potential price catalysts—consider integrating Aave protocols into your portfolio for diversified exposure.